Four U.S. States Prevent Metaverse Casino from Selling NFTs

By Jerry Smith Staff Writer Updated: 11/21/2022

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Slotie Ordered to Stop Selling NFTs

According to law enforcement officials, regulators in four U.S. states simultaneously filed emergency cease-and-desist orders on Thursday against a virtual casino called Slotie, operating in the metaverse. According to officials, Slotie’s owners were inviting investors to take part in an illegal gambling operation within the metaverse – a digital world where users are able to interact with one another, make purchases and occasionally gamble for real money.

The states involved with issuing the cease-and-desist orders were Texas, Kentucky, New Jersey, and Alabama; it’s unclear whether additional states will follow suit in the coming days and weeks.

According to law enforcement officials, Slotie was accused of defrauding investors. They ordered the company to immediately suspend the sale of its non-fungible tokens (NFTs) to all retail investors, dealing a significant blow to the company.

NFTs: The Future of Investments, or Murky Territory?

NFTs have become increasingly popular in the last few years – although they’ve recently started to attract attention from various regulators around the world. NFTs are digital assets that are stored on the blockchain, and they designate ownership of any non-fungible asset, which can include digital art, music, designs – or, in this case, shares in a digital casino. Investors who purchased these tokens were promised significant returns as the casino grew.

According to law enforcement officials, Slotie had already sold some 10,000 NFTs to the public. A spokesperson stated that Slotie began operating in October 2021. They are based in Georgia, and on their website, they claim its NFTs “are your ticket into the largest and fastest-growing online casino network on the blockchain.”

While the NFTs Slotie was selling were securitized, the law enforcement orders claim that the company failed to provide investors with important and essential assets. For example, they didn’t give the business address of the company, information about its founders – there wasn’t even an email address or phone number for investors to contact the team.

Slotie Also Failed to Disclose Crucial Financial Information

According to the orders imposed by the four states, Slotie has also been accused of failing to disclose its assets, liabilities, revenue, and other important financial information relevant to its operations of its online gambling site within the metaverse.

Joe Rotunda, the state securities board director in Texas, said that while the metaverse clearly does offer genuine business opportunities, it’s also a new breeding ground for scammers and fraudsters. This is especially worrying given the fact that the public can easily access the metaverse. Rotunda said:

The latest metaverse investment products — NFTs that purport to provide passive income — often bear significant undisclosed risks. These risks are often significant, and investing in virtual realities can leave investors virtually broke.

As a result of the court orders, Slotie must immediately stop selling NFTs to investors, until the company meets its financial security obligations. If the Slotie founders violate this, they risk being fined an amount of anything up to $10,000. At the time of writing, Slotie is yet to comment on this story.